"We continue to engage closely with industry on matters of market access ... China is a valued partner of Australia and we trust that our free trade agreement commitments to each other will continue to be honoured."

China has a history of slowing Australian coal imports to support its own coal industry.

AAP

Senator Birmingham said he had met with the Minerals Council in the last week to discuss the issue.

Department of Trade and Foreign Affairs officials told the hearing they had been aware of industry concerns about market access for weeks, but had been unable to get confirmation from Beijing.

"I know this is a very serious issue," DFAT's Graham Fletcher said. "There are market implications in terms of currency. Just in the last hour or two, it is clear that the uncertainty out there is having a real impact."

DFAT official Graham Fletcher said Beijing was yet to confirm a Chinese port's ban on Australian coal imports.

Parliament

Coal is Australia's biggest export earner and the Australian dollar tumbled on the news, falling more than 1 per cent to as low as $0.7086.

Reuters reported that five harbours overseen by Dalian customs - Dalian, Bayuquan, Panjin, Dandong and Beiliang - will not allow Australian coal to clear through customs. Coal imports from Russia and Indonesia will not be affected.

The indefinite ban on imports from top supplier Australia, effective since the start of February, comes as major ports elsewhere in China extend clearing times for Australian coal to at least 40 days.

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Australian coal imports have been banned from five ports in China.

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Australian coal imports have been banned from five ports in China.

Political retaliation?

The ban comes amid simmering tensions between Beijing and Canberra over issues such as cybersecurity and China's influence in Pacific island nations.

"The Chinese have also done these sort of environmental tests before. The key point is that the two-way trading relationship between Australia and China is vitally important and is very strong."

The ports handled about 14 million tonnes of coal last year, half of which was from Australia, according to Gu Meng, analyst at Orient Futures.

Spot Australian coking coal at northern Chinese port Jingtang is $42 cheaper per tonne than domestic prices, according to data tracked by Orient Futures. Prices of thermal coal are approximately the same.

Dalian handles both thermal and coking coal imports but the clampdown is expected to have a bigger impact on coking coal compared to thermal coal. The former is used in steel making, while the latter is used to generate electricity.